VISHAL GUPTA, MUMBAI V. ITO 21(2)(4), MUMBAI

ITA 8502/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79015 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 14-01-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 07-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Additional evidence; Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI , BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM I.T.A. NO. 8502/MUM/2010 ( / ASSESSMENT YEAR: 2006-07) VISHAL GUPTA 55, SWASTIK PLAZA, V. L. MEHTA ROAD, JVPD, MUMBAI-400 049 VS. ITO, C-10, PRATYAKASHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400 051 ! ' ./PAN/GIR NO. AACPG 7917 N ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) !#&' / APPELLANT BY : SHRI NISHIT GANDHI $%!#&' / RESPONDENT BY : SHRI SANJEEV JAIN ( )*&+, / DATE OF HEARING : 02.04.2014 -./&+, / DATE OF PRONOUNCEMENT : 28.05.2014 0 O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-32, MUMBAI (CIT(A) FOR SH ORT) DATED 26.08.2010, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2006-07 VIDE ORDER DATED 23.12.2008. 2 ITA NO. 8502/MUM/2010 (A.Y. 2006-07) VISHAL GUPTA VS. ITO 2. TO BEGIN WITH, A DELAY OF ONE DAY IN FILING THE APPEAL WAS OBSERVED BY THE BENCH. THE SAME IS ACCOMPANIED BY A CONDONATION PETITION A ND AFFIDAVIT, EXPLAINING THE REASON/S FOR THE DELAY, WHICH WE FIND AS SATISFACTORY. THE H EARING IN THE MATTER WAS ACCORDINGLY PROCEEDED WITH, ADMITTING THE APPEAL. 3. THE ISSUE ARISING IN THE INSTANT APPEAL IS THE D EDUCTIBILITY OR OTHERWISE IN LAW OF THE EXPENDITURE ON FOREIGN TRAVEL, INCURRED AND CLA IMED BY THE ASSESSEE PER ITS RETURN OF INCOME IN THE SUM OF RS.5,46,198/-. THE SAME STOOD UNDERTAKEN ON FOREIGN TRIPS TO THAILAND AND MYANMAR BY THE ASSESSEE, AN INDIVIDUAL , AND HIS FATHER. THE ASSESSEE, ENGAGED IN TRADING IN FRESH CUT FLOWERS, EXPLAINED THESE TOURS AS BEING FOR PROSPECTING BUYERS THIS BEING THE FIRST YEAR OF BUSINESS, AS WELL AS FOR FACILITATING PURCHASES AND EXPANDING THE BUSINESS IN GENERAL. HOWEVER, THE NAMES OF THE PARTIES HE MET DURING HIS FOREIGN VISIT/S COULD NOT BE FURNISHED . THE ENTIRE PURCHASES WERE MADE LOCALLY FROM ONE PARTY, M/S. CHHUTTANLAL MATTUMAL (M/S. CM FOR SHO RT), A FIRM IN WHICH THE ASSESSEES FATHER, SHRI ANIL KUMAR GUPTA, IS A PARTNER. THE SA ID FIRM HAD ALSO BOOKED EXPENSES ON FOREIGN TRAVEL AT RS.5,15,350/- FOR THE CURRENT YEA R. SIMILARLY, THE ASSESSEES ENTIRE SALES WERE ALSO LOCAL. FURTHER, A SCRUTINY OF THE EXPENDI TURE REVEALED THAT A CONVENTION HALL HAD BEEN BOOKED FOR 11.10.2005 FOR MEETING THE SUPPLIERS, INCURRING EXPENDITURE O N TEA, REFRESHMENTS, ETC. ON THAT DAY FOR 45 PERSONS. HOWE VER, AT THE SAME TIME, CAR RENTAL BILLS SHOWED THE ASSESSEE TO HAVE TRAVELLED MORE THAN 500 KM EVERYDAY FROM 07.10.2005 TO 15.10.2005 . IF THAT BE SO, WHO HAD BOOKED THE CONVENTION HALL , THE EXPENDITURE ON WHICH WAS BEING CLAIMED, AND HELD MEETINGS WITH THE SUPPL IERS? AS IT WOULD SUGGEST, IT IS THE ASSESSEES FATHER, ALSO ON TOUR TO THAT COUNTRY AT THE RELEVANT TIME, WHO WAS ATTENDING THE MEETING, WHILE THE ASSESSEE WAS AWAY TO DIFFERENT D ESTINATIONS BY CAR, OSTENSIBLY FOR A PLEASURE TRIP. NO BUSINESS PURPOSE OF THE EXPENDITU RE BEING DEMONSTRATED; THE ASSESSEE RENDERING ONLY VAGUE AND GENERAL STATEMENTS, THE DI SALLOWANCE, EFFECTED IN ASSESSMENT FOR THE ENTIRE SUM CLAIMED, STOOD CONFIRMED BY THE LD. CIT(A). AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 3 ITA NO. 8502/MUM/2010 (A.Y. 2006-07) VISHAL GUPTA VS. ITO 4. BEFORE US, THE ASSESSEES CASE WAS PRINCIPALLY F OR ADMISSION OF ADDITIONAL EVIDENCES, BEING BY WAY OF COPY OF E-MAILS SENT TO VARIOUS PARTIES IN THAILAND FOR CONFIRMATION OF THE MEETING, AND THE IMPORT EXPORT CODER (IEC) OF M/S.CM (DATED 18.05.1992) AND THE ASSESSEE (DATED 05.06.2012). TH E LD. AR, ON BEING QUESTIONED DURING HEARING, IN RESPECT OF THE ANOMALY WITH REGARD TO T HE ASSESSEE UNDERTAKING JOURNEY BY CAR, EXTENDING TO OVER 500 KMS,, WHILE HAVING HIMSELF BO OKED A CONVENTION HALL FOR A FULL DAY CONFERENCE WITH THE SUPPLIERS ON THAT DATE (11.10.2 005), WOULD SUBMIT THAT IT WAS POSSIBLE IN TODAYS AGE OF FASTER MODE OF TRAVEL. 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, GIVING OUR CAREFUL CONSIDERATION TO THE MATTER. IN OUR CONSIDERED VIEW , NOT ONLY HAS THE ASSESSEE BEEN TOTALLY UNABLE TO PROVE THE BUSINESS PURPOSE OF THE IMPUGNE D EXPENDITURE, HIS CASE STANDS THOROUGHLY DISCREDITED BY THE ADVERSE, DEFINITIVE F INDINGS BY THE AUTHORITIES BELOW. THE FIRM M/S. CM IS, AS APPARENT, LONG ESTABLISHED IN T HE TRADE. IT HAS UNDERTAKEN FOREIGN TRAVEL FOR THE PURPOSE OF ITS BUSINESS, I.E., PURCH ASE OF FLOWERS OR TOWARD DEVELOPING MORE AVENUES THEREFOR, DURING THE CURRENT YEAR. IT IMPOR TING FLOWERS FROM THAILAND, WOULD HAVE A STABLE SUPPLY CHAIN/MECHANISM, WHICH IS IN FACT M ANIFEST FROM THE ORGANIZATION OF A FULL DAY CONFERENCE AT A HOTEL (HOTEL INTERCONTINENTAL) IN BANGKOK ON 11.10.2005 FOR MEETING CURRENT AND PROSPECTIVE SUPPLIERS. IN FACT, THE SAM E WOULD HAVE ONLY BEING PRECEDED BY, AS STATED, TELEPHONIC CONVERSATIONS, E-MAILS, ETC. TO FIRM UP THE ARRANGEMENTS WITH THEM. ALL, THEREFORE, THAT WAS REQUIRED FOR THE ASSESSEE, ALSO TOURING ALONG WITH HIS FATHER, IS TO BE INTRODUCED TO THE SUPPLIERS. ON THE OTHER HAND, WE FIND HIM TO HAVE NOT EVEN ATTENDED THE CONFERENCE, STATED TO BE ARRANGED BY HIM. IN FA CT, THE ORGANIZING OF THE CONFERENCE BY THE ASSESSEE ITSELF CONTRADICTS HIS CASE OF THE VIS ITS BEING FOR PROSPECTING BUYERS, BEING NEW TO THE TRADE. FURTHER, WE OBSERVE NO SUPPLIES F ROM FOREIGN SUPPLIERS DURING THE ENTIRE YEAR, AND WHICH COULD HAVE IN FACT COMMENCED SINCE INCEPTION, AS ALL THAT WAS REQUIRED WAS TO BOOK THE GOODS FROM THE REGULAR SUPPLIERS IN THE NAME OF THE ASSESSEES FIRM. EVEN IF DIRECT SUPPLY WAS NOT POSSIBLE FOR WANT OF IEC C ODE, THE DATE OF APPLICATION FOR WHICH HAS NOT BEEN FURNISHED, IT COULD FURNISH EVIDENCE A S TO THE PURCHASES FROM M/S. CM, THE 4 ITA NO. 8502/MUM/2010 (A.Y. 2006-07) VISHAL GUPTA VS. ITO IMPORTER, BEING AT COST, SO THAT IT IS AS GOOD AS H AVING IMPORTED DIRECTLY. IN ANY CASE, OBTAINING AN IEC CODE IS THE FIRST THING A PERSON I NTENDING TO IMPORT WOULD OBTAIN, WHICH IS A MATTER OF SIMPLE PROCEDURE, WHILE THE ASSESSEE WAITS FOR YEARS TO DO SO. THE OTHER TWO TRIPS DURING THE YEAR, I.E., IN MAY AND JUNE, 2005 AND DECEMBER, 2005, EXPENDITURE ON WHICH IS BEING CLAIMED, ARE BY THE ASSESSEES FATHE R, AND TOWARD WHICH NO EXPLANATION STANDS FURNISHED AT ANY STAGE. THE ASSESSEE HAS ALS O NOT ADVANCED ANY REASON TOWARD ADMISSION OF ADDITIONAL EVIDENCE. WE ARE, ACCORDING LY, UNDER THE CIRCUMSTANCES, CLEARLY UNABLE TO PLACE ANY CREDENCE TO THE ASSESSEES CLAI MS AND, ACCORDINGLY, CONFIRM THE DISALLOWANCE OF THE EXPENDITURE IN-AS-MUCH AS THE A SSESSEE HAS CLEARLY FAILED TO PROVE THE SAME AS BEING INCURRED FOR BUSINESS PURPOSES, MUCH LESS WHOLLY AND EXCLUSIVELY. THE ASSESSEE HAS ALSO RELIED ON SOME CASE LAW. WE A RE UNABLE TO APPRECIATE THE SAME, EVEN AS NONE WAS REFERRED TO DURING HEARING. THE DISALLOWANCE IN THE INSTANT CASE STANDS SUSTAINED BY US ON THE BASIS OF THE FINDING OF A COMPLETE ABSENCE OF THE DISCHARGE OF THE BURDEN OF PROOF U/S. 37(1), A MATTER OF FACT , SO THAT THE SAID RELIANCE WOULD BE OF NO MOMENT. WE DECIDE ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. 1/+23451+& 1&+6 ORDER PRONOUNCED IN THE OPEN COURT ON MAY 28, 2014 SD/- SD/- (D. MANMOHAN) (SANJAY ARORA) / VICE PRESIDENT / ACCOUNTANT MEMBER ( 7* MUMBAI; 8 DATED : 28.05.2014 )3 ROSHANI , SR. PS !' # $%&' (!'% COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( 9+ : ; / THE CIT(A) 4. ( 9+ / CIT - CONCERNED 5 ITA NO. 8502/MUM/2010 (A.Y. 2006-07) VISHAL GUPTA VS. ITO 5. <)=>$3+3?4 ,?4/ ( 7* / DR, ITAT, MUMBAI 6. >5@* GUARD FILE !' ) / BY ORDER, */)+ , (DY./ASSTT. REGISTRAR) , ( 7* / ITAT, MUMBAI